SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For Quarter Ended June 30, 2001 Commission file number: 0-17824
REXHALL INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
California 95-4135907
(State of Incorporation) (IRS Employer Identification No.)
46147 7th Street West, Lancaster California 93534
(Address of principal executive offices) (Zip Code)
(661) 726-0565
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes x No _____.
Applicable only to Corporate Issuers
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 3,036,350 as of 8/14/01.
<page>
REXHALL INDUSTRIES, INC.
INDEX
PART 1 - FINANCIAL INFORMATION PAGE NUMBER
Item 1.
Condensed Consolidated Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets at June 30, 2001 3
and December 31, 2000
Condensed Consolidated Statements of Operations for the
three and six months ended June 30, 2001
and June 30, 2000 4-5
Condensed Consolidated Statements of Cash Flows for the
six months ended June 30, 2001 and June 30, 2000 6
Notes to Condensed Consolidated Financial Statements 7-8
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-12
Item 3.
Quantitative and Qualitative Disclosure About Market Risk 13
PART II - OTHER INFORMATION
Repurchase Agreements 13
Legal Proceedings 13
Subsequent Events 13
Signatures 14
<page>
(Unaudited) (Audited)
June 30, December 31,
PART I - FINANCIAL INFORMATION 2001 2000
Item 1. - Condensed Consolidated Financial Statements
REXHALL INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
CURRENT ASSETS
Cash $ 4,474,000 $ 3,427,000
Accounts Receivable - Net 3,771,000 5,832,000
Inventories 22,737,000 22,475,000
Income Tax Receivable 208,000 281,000
Deferred Income Taxes 821,000 821,000
Other Current Assets 169,000 340,000
Total Current Assets $32,180,000 33,176,000
Property and Equipment - Net 6,088,000 6,152,000
Property Held for Sale 124,000 127,000
Other Assets 164,000 154,000
TOTAL ASSETS $38,556,000 $39,609,000
LIABILITIES & SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 5,487,000 $ 6,773,000
Notes Payable and current portion
of long-term debt 7,036,000 6,638,000
Warranty Reserve 632,000 837,000
Accrued Legal 401,000 445,000
Dealer Incentives 826,000 732,000
Other Accrued Liabilities 525,000 691,000
Accrued Compensation and Benefits 389,000 371,000
Total Current Liabilities $15,296,000 $16,487,000
Deferred Income Tax Liabilities 55,000 55,000
Long Term Debt, less current portion 688,000 705,000
TOTAL LIABILITIES 16,039,000 17,247,000
SHAREHOLDERS' EQUITY
Preferred Stock - no par value;
Authorized 1,000,000 shares;
No shares outstanding at
June 30, 2001 and December 31, 2000 --- ---
Common Stock - no par value;
Authorized 10,000,000 shares; issued and
outstanding 3,036,000 and 3,057,000 shares at June 30, 2001
and December 31, 2000 6,139,000 6,241,000
Loan receivable from exercise of options (51,000) (57,000)
Retained Earnings 16,429,000 16,178,000
TOTAL SHAREHOLDERS' EQUITY 22,517,000 22,362,000
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $38,556,000 $39,609,000
See accompanying notes to condensed consolidated financial statements.
<page>
PART I - FINANCIAL INFORMATION
Item 1. - Condensed Consolidated Financial Statements
REXHALL INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended
June 30, 2001 June 30, 2000
Net Revenues $ 17,979,000 $ 14,936,000
Cost of Sales 15,834,000 13,058,000
Gross Profit 2,145,000 1,878,000
Selling, General, Administrative
Expenses and Other Expenses 1,923,000 1,223,000
Income Before Income Taxes 222,000 655,000
Income Taxes 90,000 295,000
Net Income $ 132,000 $ 360,000
Basic and Diluted Net Income
Per Common Share $ .04 $ 0.11
Weighted Average
Shares Outstanding - Basic and Diluted 3,037,000 3,154,000
See accompanying notes to condensed consolidated financial statements.
<page>
PART I - FINANCIAL INFORMATION
Item 1. - Condensed Consolidated Financial Statements
REXHALL INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Six Months Ended
June 30, 2001 June 30, 2000
Net Revenues $36,362,000 $ 35,495,000
Cost of Sales 31,868,000 30,419,000
Gross Profit 4,494,000 5,076,000
Selling, General, Administrative
Expenses and Other Expenses 4,071,000 2,766,000
Income Before Income Taxes 423,000 2,310,000
Income Taxes 172,000 986,000
Net Income $ 251,000 $ 1,324,000
Basic and Diluted Net Income
Per Common Share $ .08 $ .42
Weighted Average
Shares Outstanding -Basic and Diluted 3,047,000 3,154,000
See accompanying notes to condensed consolidated financial statements.
<page>
PART I - FINANCIAL INFORMATION
Item 1. - Condensed Consolidated Financial Statements
REXHALL INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended
June 30, 2001 June 30,2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 251,000 $ 1,324,000
Adjustments to reconcile net income to net cash provided by (used in)
Operating Activities:
Depreciation and Amortization 206,000 246,000
Gain on Sale of Property,
Plant and Equipment (3,000) ---
Provision for Deferred Income Tax --- 255,000
(INCREASE) DECREASE IN:
Accounts Receivable 2,061,000 2,471,000
Inventories 136,000 542,000
Income Tax Receivable 73,000 ---
Other Assets 161,000 (295,000)
INCREASE (DECREASE) IN:
Accounts Payable (1,286,000) (4,135,000)
Warranty Reserve (205,000) (562,000)
Accrued Legal (44,000) ---
Other Current Liabilities 19,000 ---
Dealer Incentives 94,000 (200,000)
Net cash provided by (used in)
operating activities $1,463,000 $ (354,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (221,000) (186,000)
Proceeds from Sale of Property,
Plant and Equipment 85,000 ---
Net cash used in
investing activities (136,000) (186,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt (17,000) (15,000)
Repayment of short-term debt (167,000) (71,000)
Proceeds from Exercise of Stock Options 6,000 ----
Repurchase and retirement of stock (102,000) (290,000)
Net cash used in
financing activities (280,000) (376,000)
NET INCREASE (DECREASE) IN CASH $ 1,047,000 $ (916,000)
BEGINNING CASH BALANCE 3,427,000 6,330,000
ENDING CASH BALANCE $4,474,000 $ 5,414,000
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING
ACTIVITIES:
Inventory Purchase on Vehicle
Credit Facility $ 398,000 ---
See accompanying notes to condensed consolidated financial statements.
<page>
PART I - FINANCIAL INFORMATION
Item 1.
REXHALL INDUSTRIES, INC.
Notes to the Condensed Consolidated Financial Statements
June 30, 2001
1. Basis of Presentation:
The accompanying unaudited Condensed Consolidated Financial Statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. However, in the opinion of management, they include all
adjustments, consisting of normal accruals, necessary to present fairly the
information set forth herein in accordance with generally accepted accounting
principles for interim reporting.
For further information refer to the Financial Statements and footnotes
included in the Registrant's Annual Report on Form 10-K for year ended
December 31, 2000.
The results of operations for any interim period are not necessarily
indicative of the results to be expected for the full year.
2. Summary of Significant Accounting Polices:
Income Taxes
Income tax expense is based upon the estimated effective tax rate for the
entire fiscal year. The effective tax rate is subject to ongoing evaluation
by management.
Earnings Per Share
Basic earnings per share represents net earnings divided by the
weighted-average number of common shares outstanding for the period. Diluted
earnings per share represents net earnings divided by the weighted-average
number of shares outstanding, inclusive of the dilutive impact of common
stock options, if any. No options were outstanding during the periods ended
June 30,2 001 and 2000.
3. Details of Inventory June 30, 2001 December 31, 2000
Raw Materials $6,284,000 $6,561,000
Work-in-Progress 1,733,000 1,810,000
Finished Goods-Manufacturing 7,365,000 6,579,000
Finished Goods-Retail Operations 7,355,000 7,525,000
TOTAL $22,737,000 $22,475,000
<page>
4. Segment Information
The Company's reportable business segments are manufacturing and retail
operations. Management evaluates segment performance based primarily on
revenue and net income (loss).
Segment information is summarized as follows (in thousands):
Three Months Ended
June 30, 2001 June 30, 2000
Net Revenues:
Manufacturing $16,442 $14,936
Retail Operations 1,770 ---
Intercompany Elimination (233) ---
$17,979 $14,936
Net Income (Loss):
Manufacturing $ 213 $ 360
Retail Operations (116) ---
Intercompany Elimination 35 ---
$ 132 $ 360
Six Months Ended
June 30, 2001 June 30, 2000
Net Revenues:
Manufacturing $31,751 $35,495
Retail Operations 6,980 ---
Intercompany Elimination (2,369) ---
$36,362 $35,495
Net Income (Loss):
Manufacturing $ 475 $ 1,324
Retail Operations (224) ---
Intercompany Elimination --- ---
$ 251 $ 1,324
June 30, 2001 December 31, 2000
Total Assets:
Manufacturing $32,059 $ 33,311
Retail Operations 8,677 9,181
Intercompany Elimination (2,180) (2,883)
$38,556 $ 39,609
5. Certain reclassifications have been made to the 2000 financial statements
to conform to the 2001 presentation.
<page>
PART I - FINANCIAL INFORMATION
Item 2. -Management Discussion and Analysis of Financial Condition and
Results of Operations. All statements in this discussion and analysis which
relate to future sales, costs, capital expenditures or earnings are
"Forward-Looking Statements" and should be read subject to the assumptions
contained in the "Forward-Looking Statements".
Results of Operations
Comparison of the Three Months ended June 30, 2001 to the Three Months ended
June 30, 2000
Revenues - 2001 Compared with 2000
Net revenues for the second quarter ended June 30, 2001 were $17,979,000 as
compared to $14,936,00 for the second quarter in 2000. This represents a
20.4% increase from the prior year.
Net revenues for the manufacturing operations were $16,442,000 on net
shipments of 211 units, which were up 10% and 3%, respectively, when compared
to the second quarter of 2000. The increase in net revenue and shipments is
primarily due to the repurchase of 19 units in the second quarter 2000 at a
cost of $1,310,000 under the floorplan repurchase agreements related to the
Arizona dealership which declared bankruptcy during the first quarter of
2000. Excluding the repurchased units in 2000, second quarter revenues have
increased 1% while net shipments have decreased 6% when compared to the
second quarter 2000. Wholesale shipments of the Company's gas motorhomes
were down 21%, while diesel motorhome shipments were up 72% when compared to
last year's second quarter. The decrease in net shipments is primarily
attributable to an industry-wide decline in Class "A" shipments of 20% when
compared to last year. Poor RV industry fundamentals of weakened consumer
confidence, a tightening of credit, and high fuel costs continue to be the
drivers of the overall down market. Management cannot determine when these
conditions will improve.
Retail operations generated net revenues of $1,770,000 on sales of 9 new
motorhomes, 12 used motorhomes, and 30 towables. Since the Company did not
have retail operations in the second quarter of 2000, no comparisons can be
made. Intercompany eliminations account for the difference between the total
net revenues and the sum of manufacturing and retail operations.
Gross Profit - 2001 compared with 2000
Gross profit for the second quarter increased to $2,145,000 from $1,878,000
for the same quarter last year, which is an increase of $267,000 or 14.2%.
The gross margin was 11.9% versus 12.6% last year.
Gross profit for manufacturing operations decreased to $1,848,000 from
$1,878,000 for the same quarter in 2000, which is a decrease of $30,000 or
1.6%. Gross margin was 11.2% as compared to 12.6% last year. The decrease
in gross margin was attributable to higher material and overhead costs
absorbed by each unit. The decrease in units sold created a smaller
absorption base for manufacturing overhead. The nature of these costs is
less variable than direct materials and labor, so overhead absorption suffers
in periods of declining shipments. Contrary to what the rest of the industry
experienced, the Company did not have to significantly increase its level of
rebates or discounts to hold market share.
Retail operations' gross profit was $327,000 with a gross margin of 18.5%.
Since the Company did not have retail operations in the second quarter of
2000, no comparisons can be made. Intercompany eliminations account for the
difference between the total net revenues and the sum of manufacturing and
retail operations.
Management expects the margins to hold or improve, but there are no
assurances due to the unknown direction of the RV industry fundamentals and
competition within the industry.
<page>
Selling, General Administrative and Other Expenses-2001 compared with 2000
Selling, General and Administrative and Other Expenses increased by
approximately $700,000 from the second quarter of 2000 to the second quarter
of 2001. Selling, general administrative and other expenses increased to
10.7% as a percentage of sales when compared to 8.2% for the quarter ended
June 30, 2000.
For manufacturing operations, S, G & A and other expenses increased $270,000
to $1,493,000, and increased as a percentage of sales from 8.2% to 9.1%.
Research and Development costs accounted for the majority of the increase.
Retail operations' S, G & A and other expenses were $517,000 or 29.2% of
sales. The Company's retail operations tend to be seasonal in nature with
higher revenues in the first and fourth quarters. Cost reductions were
implemented in the second quarter of 2001, however, due to the lower sales
base, S, G & A as a percentage of sales is higher in the "off season".
Additionally, retail operations typically have a higher percentage of
expenses than manufacturing operations in these areas due to the nature of
the business. For instance, the retail operations incurred $146,000 of
interest charges related to the flooring of inventory during the period.
Intercompany eliminations account for the difference between the total
S,G, & A and other expenses and the sum of manufacturing and retail
operations.
Income Before Taxes - 2001 Compared to 2000
Income tax expense was $90,000 for the quarter ended June 30, 2001 as
compared to $295,000 in the second quarter of 2000. Income taxes are
provided based upon the estimated effective tax rate for the entire fiscal
year applied to the pre-tax income for the period. The effective tax rate
is subject to ongoing evaluation by management.
Results of Operations
Comparison of the Six Months ended June 30, 2001 to the Six Months ended June
30, 2000
Revenues - 2001 Compared with 2000
Net revenues for the six months ended June 30, 2001 were $36,362,000 as
compared to $35,495,00 for the same period in 2000. This represents a 2.4%
increase from the prior year.
Net revenues for the manufacturing operations were $31,752,000 on net
shipments of 405 units compared to $35,495,000 on net shipments of 494 for
the six months ended June 30, 2000. This represents a decrease of 10% and
18%, respectively. Net revenues for the six months ended June 30, 2000
reflects the repurchase of 19 units at a cost of $1,310,000 under the
floorplan repurchase agreements related to the Arizona dealership, which
declared bankruptcy during the first quarter of 2000. Wholesale shipments
of the Company's gas motorhomes were down 35%, while diesel motorhome
shipments were up 84% when compared to the same period in 2000. The decline
in net revenues is primarily attributable to an industry-wide decline in
Class "A" shipments of 28% when compared to last year. Poor RV industry
fundamentals of weakened consumer confidence, a tightening of credit, and
high fuel costs continue to be the drivers of the overall down market.
Management cannot determine when these conditions will improve.
Retail operations generated net revenues of $6,980,000 on sales of 42 new
motorhomes, 43 used motorhomes, and 100 towables. Since the Company did not
have retail operations during the first six months of 2000, no comparisons
can be made. Intercompany eliminations account for the difference between
the total net revenues and the sum of manufacturing and retail operations.
Gross Profit - 2001 compared with 2000
Gross profit for the period decreased to $4,494,000 from $5,076,000 for the
same period last year, which is a decrease of $582,000 or 11.5%. The gross
margin was 12.4% versus 14.3% last year.
<page>
Gross profit for manufacturing operations decreased to $3,581,000 from
$5,076,000 for the same period in 2000, which is a decrease of $1,495,000 or
29.5%. Gross margin was 11.3% as compared to 14.3% last year. The decrease
in gross margin was attributable to lower sales and higher material and
overhead costs absorbed by each unit. The decrease in sales created a
smaller absorption base for manufacturing overhead. The nature of these
costs is less variable than direct materials and labor, so overhead
absorption suffers in periods of declining sales. Contrary to what the rest
of the industry experienced, the Company did not have to significantly
increase its level of rebates or discounts to hold market share.
Retail operations' gross profit was $913,000 with a gross margin of 13.1%.
Since the Company did not have retail operations during the first six months
of 2000, no comparisons can be made. Intercompany eliminations account for
the difference between the total net revenues and the sum of manufacturing
and retail operations.
Management expects the margins to hold or improve, but there are no
assurances due to the unknown direction of the RV industry fundamentals and
competition within the industry.
Selling, General Administrative and Other Expenses-2001 compared with 2000
Selling, General and Administrative and Other Expenses increased by
approximately $1,305,000 for the six months ended June 30, 2001 when compared
to the same period in 2000. Selling, general administrative and other
expenses increased to 11.2% as a percentage of sales when compared to 7.8%
for the six months ended June 30, 2000.
For manufacturing operations, S, G & A and other expenses increased $24,000 to
$2,790,000 and increased as a percentage of sales from 8.8% to 7.8% due to
the decline in sales base.
Retail operations' S, G & A and other expenses were $1,281,000 or 18.4% of
sales. Retail operations typically have a higher percentage of expenses in
these areas due to the nature of the business versus manufacturing
operations. For instance, the retail operations incurred $320,000
of interest charges related to the flooring of inventory during the period.
Income Before Taxes - 2001 Compared to 2000
Income tax expense was $172,000 for the six months ended June 30, 2001 as
compared to $986,000 in the comparable period of 2000. Income taxes are
provided based upon the estimated effective tax rate for the entire fiscal
year applied to the pre-tax income for the period. The effective tax rate is
subject to ongoing evaluation by management.
Financial Condition, Capital Resources and Liquidity
The Company has relied primarily on internally generated funds, trade credit
and debt to finance its operations and expansions. As of June 30, 2001, the
Company had working capital of $16,884,000 compared to $16,689,000 at
December 31, 2000. The $195,000 increase in working capital is primarily
due to a $1,286,000 decrease in accounts payable, a $1,047,000 increase in
cash, offset by a $2,061,000 decrease in accounts receivable.
Capital expenditures during the first six months of 2001 were $221,000.
Management anticipates an increase in the rate of capital expenditures for
the remainder of 2001 related to refurbishment and expansion of the
production facilities and related production equipment. The anticipated
increases are expected to be incurred when the Company begins construction
of a new facility.
Cash flows from financing activities for the six months ended June 30, 2001
consists primarily of stock repurchases of $102,000 and repayment of
short-term debt of $167,000 related to the Company's insurance policies. The
Company will buy back stock in the open market from time to time when the
market price is deemed to be appropriate by management. Future repurchases
of common stock for the remainder of 2001 is not expected to be significant.
<page>
As of June 30, 2001 the Company has a $3,500,000 line of credit with a bank
which can be used for working capital purposes. The line expires on October
1, 2001, at which time the Company anticipates having similar financing
arrangements available. Under this line of credit, $283,000 has been set
aside as an irrevocable standby letter of credit for the Company to meet the
requirements for self-insurance established by the Department of Industrial
Relations which regulates workmen's compensation insurance in California. At
June 30, 2001, no amounts were outstanding under the line of credit
agreement. The line of credit contains various covenants. The Company was
in compliance with such covenants as of June 30, 2001.
The Company has a line of credit with a chassis vendor, Ford Motor Credit
Company ("FMCC"), with an $8,000,000 limit. Borrowings under the line bear
interest at an annual rate of prime plus 1% (7.75% at June 30, 2001). All
borrowings are secured by the Ford merchandise. The outstanding balance
included in accounts payable at June 30, 2001 was $2,084,000.
The Company has a line of credit with a financial institution for financing
purchases of inventory for its retail operations. The line of credit has a
limit of $7,500,000 and borrowings under the line bear interest at an annual
rate of prime plus .5% (7.25% at June 30, 2001). All borrowings are secured
by inventory held by the Company's retail operations. The balance
outstanding at June 30, 2001 was $7,000,000.
The Company anticipates that it will be able to satisfy its ongoing cash
requirements through 2001, including payments related to the expansion plans
at the California and Arizona facility, primarily with cash flows from
operations, supplemented, if necessary, by borrowings under its revolving
credit agreement.
Impact of Recently Issued Accounting Standards
In July 2001, the FASB issued Statement NO. 141, Business Combinations, and
Statement NO. 142, Goodwill and Other Intangible Assets. Statement 141
requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001 as well as purchase method
business combinations completed after June 30, 2001. Statement 141 also
specifies criteria intangible assets acquired in a purchase method business
combination must meet to be recognized and reported apart from goodwill,
noting that any purchase price allocable to an assembled workforce may not
be accounted for separately. Statement 142 will require that goodwill and
intangible assets with indefinite useful lives no longer be amortized, but
instead tested for impairment at least annually in accordance with the
provisions of Statement 142. Statement 142 will also require that
intangible assets with definate useful lives to be amortized over their
respective estimated useful lives to their estimated residual values, and
reviewed for impairment in accordance with SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of.
The Company is required to adopt the provisions of Statement 141 immediately,
except with the regard to the business combinations initiated prior to July 1,
2001, which it expects to account for using the pooling-of-interests method,
and Statement 142 effective January 1, 2002. Furthermore, any goodwill and
any intangible asset determined to have an indefinite useful life that are
acquired in a purchase business combinations completed after June 30, 2001
will not be amortized, but will continue to be evaluated for impairment in
accordance with the appropriate pre-Statement 142 accounting literature.
Goodwill and intangible assets acquired in business combinations completed
before July 1, 2001 will continue to be amortized prior to the adoption of
Statement 142. The Company does not expect the adoption of Statement 141
and 142 to have a significant impact on the statement of financial position
or result of operations.
Forward-Looking Statements
Our statements of our intentions or expectations are "forward-looking
statements" based on assumptions and on facts known to us today. Those
assumptions will become less valid over time, but we do not intend to update
this report. Rexhall's business is seasonal, and sales should be increasing
now, but the market factors are depressing the industry sales. Low interest
rates, low unemployment, and ready availability of motor fuel have in the
past been associated with favorable recreational vehicle sales as has
occurred in 1998 and 1999. However, the recent gas price increases, coupled
with recent reports of decreased consumer confidence are depressing the
market and may reduce future sales. Many of Rexhall's competitors are
substantially larger, and many of its suppliers and dealer's also have
greater economic power so that the volume and prices of both supplies and
sales may be adversely affected. Management intends to remain aware of
these factors and react to them, but cannot predict their timing or
significance.
<page>
Item 3. Quantitative and Qualitative Disclosure About Market Risk
In the ordinary course of its business, the Company is exposed to certain
market risks, including changes in interest rates. After an assessment of
these risks to the Company's operations, the Company believes that its
primary market risk exposures relating to interest rates (within the
meaning of Regulation S-K Item 305) are not material and are not expected to
have any material adverse effect on the Company's financial condition,
results of operations or cash flows for the next fiscal year. The Company's
line of credit permits a combination of fixed and variable rates at the
Company's option, which Management believes reduces the risk of interest rate
fluctuations. A 1% increase/decrease in interest rates would result in less
than $70,000 of increase/decrease in interest expense.
Part II - Other Information
Repurchase Agreements - Motorhomes purchased under financing agreements by
dealers are subject to repurchase by the Company, in some cases, at dealer
cost plus unpaid interest in the event of default by the dealer. During
2000, 1999 and 1998 the Company repurchased approximately $4,190,000,
$1,973,000 and $832,000 respectively, of motorhomes under these agreements.
At June 30, 2001 and December 31, 2000, approximately $28,700,000 and
$26,700,000, respectively, of dealer inventory is covered by repurchase
agreements. Dealers do not have the contractual right to return motorhomes
under any Rexhall Dealer Agreement. There are also a number of states
statutes which require the repurchasing of motorhomes whenever a dealership
is terminated.
Legal Proceedings - The Company is a defendant in various legal proceedings
from the normal course of business. In the opinion of Company management,
the resolution of such matters will not have a material effect on its
financial statements or results of operations.
Subsequent Events - On July 18, 2001, a fire broke out at the Company's
manufacturing plant in Lancaster, California. The fire was quickly contained
and there were no injuries. The Company was back in production within 2
days. Damages are estimated between $1,500,000 and $2,000,000 and are fully
covered by insurance, with the exception of a minimal deductible.
<page>
REXHALL INDUSTRIES, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned there unto duly authorized.
Rexhall Industries, Incorporated
(Registrant)
By /S/ William J. Rex By /S/J. Michael Bourne
(Signature and Title)* (Signature and Title)*
William J. Rex, President, J. Michael Bourne,
CEO & Chairman Executive V.P., COO,
Date: August 15, 2001 Acting CFO
Date: August 15, 2001
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant in capacities and on the
dates indicated.
By /S/ William J. Rex
(Signature and Title)*
William J. Rex
President & CEO
Chairman of the Board
Date: August 15, 2001
By /S/ Donald C. Hannay, Sr.
(Signature and Title)*
Donald C. Hannay, Sr.
Vice President of Sales & Marketing
Director
Date: August 15, 2001
By /S/ Robert A. Lopez
(Signature and Title)*
Robert A. Lopez
Director
Date: August 15, 2001
By /S/ Frank A. Visco
(Signature and Title)*
Frank A. Visco
Director
Date: August 15, 2001
By /S/ Dr. Dennis K. Ostrom
(Signature and Title)*
Dr. Dennis K. Ostrom
Director
Date: August 15, 2001